How Amazon Perfected Online Delivery
Amazon is a pioneer in the online retail industry. Since it was founded in 2004, it has set the standard for online deliveries. It’s currently the fastest company to earn over $100 billion in sales revenue, a feat that took just 20 years. What really differentiated Amazon from other companies was the introduction of features that capitalized on customers’ need for instant deliveries.
Services like Amazon Prime guaranteed members free two-day shipping for any of their products, an industry game changer. When Amazon Prime was launched, its competitors struggled to keep up. Amazon made what would seem like a supply chain nightmare work to their advantage.
How did they do it you may ask? The Balance Small Business notes that one of the secrets to their success was outsourcing inventory management. 82% of Amazon’s sales came from third-party sellers. For them to get products to the doorsteps of their customers in two days, they needed to work closely with their partners. This was especially helpful for products that weren’t regularly bought by their customers.
What Amazon didn’t completely outsource however was its logistics. The company understood that relying completely on third-party logistics would compromise their two-hour and same day delivery promises. This, plus their strategic positioning of warehouses near urban markets, was what allowed them to fulfil their customer promise.
Despite new competitors cropping up left, right and centre, Investopedia explains how Amazon has kept their customer base engaged by providing perks. Just last year, Amazon launched a food delivery service exclusively for its Amazon Prime members who are paying an annual membership fee. This helps in retaining its customers in the face of other instant delivery services.
Amazon is continually looking for ways to use the latest supply chain management technology to offer fast deliveries. Business Insider reports that in the U.S., Amazon has patented the use of drones to help deliver parcels. Drones can travel up to 100 miles per hour carrying packages under five pounds. Using drones could be faster and cheaper than conventional delivery methods.
This need for faster service has already led to some advances in the delivery industry, with parcel services and fleets across the globe relying heavily on technology to improve drop off times. In the UK, fleet companies use tracking technology to provide greater transparency in the delivery of items.
Verizon Connect details how fleet companies are using IoT technology to provide real-time updates on the delivery of packages. The site also notes how the technology can allow operators to “re-route drivers at a moment’s notice” in order to serve more customers in less time. These allow customers to know exactly where their parcels are and help companies like Amazon to provide the fast delivery services that the company promises.
Despite the efficiency of the Amazon supply chain, USA Today wrote a feature on their possible expansion to the delivery service industry, rivalling companies like UPS and FedEx. They started out by testing whether Amazon trucks could pick up products directly from their third-party retailers and deliver them to customers, instead of having products shipped to Amazon centres.
This quest for improvement and expansion is really what sets Amazon apart from other online delivery systems and what will set them apart for years to come. It is why they are the leading online retailer.
